Crippling loan programme

Islamabad’s struggle to get the IMF bailout programme restored continues, as the global lender is coming up with one condition after the other – so much so that the official authorities have started complaining of ‘maltreatment’ and believing that foreign capitals are working for Pakistan’s ‘meltdown’.

Such a belief has stemmed from the fact that despite implementation on many a tough decision, carrying huge political cost, the global lender has kept moving the goalposts.
 

When, last week, things looked set for a staff-level agreement, the IMF put forward four more demands: hike in the SBP’s interest rate to represent headline inflation; imposition of Rs3.82 per unit debt servicing surcharge on electricity to continue till June 2024 rather than just four months as announced by the government; a foreign exchange rate to match for outflows to the war-ravaged Afghanistan; and written assurances from friendly countries on meeting external financing gap.

While the first two mentioned demands have been met by the government – with the power tariff having been increased as mentioned and the interest rate soaring to a 27-year high of 20% – the jump in the value of dollar by about 24 rupees over the last two days hints at the government having bowed down to the demand related to the Afghan border exchange rate. Written assurances from friendly countries on external financing gap is reportedly in the works too.
 

The IMF loan programme is already costing the masses dear, as the rate of inflation, at 31.6%, has risen to an almost 50-year high; and compliance with the new demands is sure to push it up further. Where the harsh conditions are intolerable for the common man as well as the business community in the country, they are not either working to meet their target of increasing the implementation capacity of the IMF-suggested reform measures themselves.

The Fund must realise that the economic reforms programme, being imposed on the Pakistan government, needs to be workable so as to enable the country to increase its debt repayment capacity.